Question

Anyone can help me answer this question around 400 words each with typing and with link!!! need it asap!!! (Business strategy)

Wells Fargo - Was in the top 10 banks in USA. In 2015, Assets of $1.8T, 265,000 employees, Market Cap of $300B and Serving 1 irn 3 households. What is the economic rationale of the "cross-sell" strategy? Was the strategy appropriate for Well Fargo? What role did it play in the Bank's success? Why did "cross-sell" strategy of Wells Fargo start showing signs of trouble in 2011? What role did financial incentives and quotas play in the success of the cross selling? What were the effects of implementation of the cross sell strategy internal and to stakeholders? (benefits and costs)? You are the "NEW" CEO of Wells Fargo. What changes would you make to restore the reputation and put Wells Fargo back on increasing financial performano

Answer 1

Answer to part (1)

A Cross Sell strategy refers to the practice of selling a different product to an existing client. Example, encouraging a customer to purchase power bank along with the mobile phone that he is already purchasing.

Cross Selling is a very common sales technique used nowadays, wherein the entities use the customers’ database to reach out to them to market a new product or induce them to buy an ancillary gadget that they proclaim to have the ability to improve the utility of the ones already bought by them.

The economic rationale behind cross selling is that the more products that customers will have from a company, the more information the company will have about them, thereby enabling the company in market research, product development, budgeting and pricing.

In order to make the employees achieve their cross-sales targets, they are lured with nice incentive schemes and even given a proper training.

Wells Fargo implemented the cross sales strategy rather very aggressively. It burdened its team with daily cross-sales targets. The unachieved part got clubbed with next day’s target. This resulted in pressuring the employees so much that some of them ended up splitting the funds lying in the accounts of the existing customers and opening hoax accounts without their authorization. They used forged signatures in this dubious act.

In 2011, the rumours about this scam started doing the rounds in media. The management of the bank kept denying them though. Finally, in 2016 everything became crisp clear when Wills Fargo paid $185 million to settle a lawsuit brought against it by the regulators. It was revealed that about 2 million hoax accounts were created by employees. Stock prices fell by 2% right on the day of news.

Wells Fargo did damage control in the following ways :-

1. It set up an independent consulting firm to look into the matter further.
2. It immediately removed the target based incentive plan for employees and substituted it with customer service oriented one.
3. New mechanisms were developed to verify authenticity of the new accounts opened and additional measures were taken to make the employees aware of the bank’s ethical code of conduct.
4. Constant efforts had to be made by the top management to control the reputational damage this whole incident caused.